The second largest U.S. public pension fund said on Tuesday it plans to vote all of its Wal-Mart Stores Inc. shares against the entire board in the wake of bribery allegations in Mexico that Wal-Mart officials failed to fully investigate.

CalSTRS plans to vote its 5.3 million Wal-Mart shares against the re-election of all board members and encouraged other shareholders to do the same.

Retail

Retail

California State Teachers’ Retirement System, or CalSTRS, has already sued current and former Wal-Mart executives, saying allegations the company paid millions of dollars of bribes in Mexico and a cover-up by Wal-Mart officials raised the question of whether top executives should remain in place.

CalSTRS joins a growing call for shareholders not to vote for at least some Wal-Mart board members, including chief executive officer Mike Duke and former CEO Lee Scott.

The moves follow an April report by The New York Times that said Wal-Mart failed to fully investigate allegations in the last decade of widespread bribery by company officials in Mexico, a key foreign market.

The allegations “indicate a breakdown of corporate governance and lack of oversight that should have averted this situation,” CalSTRS said in a statement.

CalSTRS added it “does not have confidence the current board has the independence and leadership needed to address these difficult issues.”

Even with big shareholders such as CalSTRS saying they will vote against the board, the family of Wal-Mart founder Sam Walton controls roughly half of the company’s shares, making any such votes unlikely to pass.

CalSTRS is concerned about the independence of the entire board. It is also voting against Marissa Mayer, a Google Inc. executive who is standing for election to the Wal-Mart board for the first time.

The board currently totals 15 members, not including Ms. Mayer.

Shares of Wal-Mart were up 1.2 per cent at $63.79 in midday trading after rising to $63.67, their highest level in more than 10 years, earlier in the session.

Latest group to go against the board

CalSTRS is the latest shareholder to make its voting plans public ahead of Wal-Mart’s June 1 shareholders’ meeting.

The New York City Pension Funds, which holds 5.6 million Wal-Mart shares, are also opposed to the re-election of certain board members.

Proxy advisory firms have suggested shareholders vote against Mr. Duke, former Mr. Scott and some other board nominees.

Mr. Scott was CEO during the period of the alleged bribery and Mr. Duke was head of Wal-Mart International when the allegations at Wal-Mart de Mexico, or Walmex, were being looked at by the company.

Still, some shareholders plan to support the board despite the lingering concerns about the bribery allegations.

“We don’t think it has a meaningful malignant long-term impact on the company, we also don’t think it’s immaterial,” said Shawn Kravetz, president of Esplanade Capital LLC, which sold most of its Wal-Mart shares on their recent rise. “At this moment we’ll be siding with the board and its recommendation.”

Glass Lewis recommended shareholders vote against Mr. Scott, Mr. Duke and Mr. Williams, as well as Aida Alvarez, Michele Burns, James Cash and Arne Sorenson. It said Mr. Williams, Ms. Alvarez, Ms. Burns, Mr. Cash and Mr. Sorenson served on the audit committee when there was a failure to fully investigate the bribery allegations.

Restrictions

All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. Thomson Reuters is not liable for any errors or delays in Thomson Reuters content, or for any actions taken in reliance on such content. ‘Thomson Reuters’ and the Thomson Reuters logo are trademarks of Thomson Reuters and its affiliated companies.